Attitude Is Intrinsic

There's a story about basketball great Larry Bird that goes something
like this: It's the day of the first Long Distance Shootout, prior to
the 1986 NBA All-Star game. Bird comes into the room where the other seven
contestants are getting ready and asks, "Which one of you is going
to come in second?"

Jason Liu exudes that kind of confidence. Ask him what differentiates
his company, Intrinsic Technologies LLC of Lisle, Ill., from other Microsoft
service providers and you'll hear -- repeatedly -- that Intrinsic
is "quicker, faster, better" than its competitors and that his
consultants are the IT equivalent of brain surgeons.

But, like Bird, Liu has the numbers to back up his claims. His company
has averaged 25 percent growth in each of the last three years (although
he declines to say how much revenue the company generates). The reason
for its success lies in the tools it has created to automate software
deployments, most notably its SWIMAGE offering. Using these tools, Intrinsic
claims it can lower a customer's deployment costs for Windows XP and applications
such as Office 2003 by 30 percent to 80 percent. Thanks to SWIMAGE and
some significant investments in the Microsoft Deployment Service Partner
(DSP) program, revenue from Intrinsic's operating system migration business
has doubled in the last year, Liu says.

"We like to think of ourselves as one of, if not the premier Microsoft
infrastructure services firm," Liu says. "We're not the largest
one, but certainly kind of the brain surgeons of Microsoft services."

Automating for Success
Intrinsic was founded in 1997 as a regional systems integrator by Tom
LaMantia, now chief operating officer, and Rick Schendelman, who is now
chairman. They brought in Liu as CEO in 2002, primarily to help the company
go national.

Liu's Best Decision
with Intrinsic:To
focus on Microsoft, starting with SMS and MOM desktop deployment.
"Don't try to be everything to everyone. Be the best at something."

Today, the company's customers are typically larger firms -- the Global
5000, as Liu puts it. Those customers are drawn to Intrinsic not only
for the quality of its consultants, he says, but also for the intellectual
property and intellectual capital that comes with those consultants. By
that he means SWIMAGE and the best practices and templates that complement
it.

As is the case with most any systems integrator (SI), over the years
Intrinsic consultants created a number of tools, scripts and utilities
to help them more quickly deploy Microsoft operating systems and applications.
"About three years ago, we decided to rewrite
all of them in .NET and really turn them from a set of tools and scripts
into a true product," Liu says. The result, SWIMAGE, is a desktop and server deployment
framework that's built on top of Microsoft's Systems Management Server
(SMS) and the Microsoft Solution Accelerator for Business Desktop Deployment
(BDD) tools. The idea is to start with the basic functions that those
Microsoft tools provide, but take them a step further by automating additional
functions.

For example, desktop deployments vary according to various criteria,
such as which department the users work in and the titles they hold. Products
such as SMS will act as the transport mechanism to actually deploy the
desktop software, Liu says, but you have to manually tell it what applications
to place on each desktop. SWIMAGE allows for policy-based deployments
in which all users in the marketing department, for instance, automatically
get configured with the same set of applications. Automating such functions
is how Intrinsic saves companies a chunk of the costs associated with
software deployments.
"We're now licensing SWIMAGE to end users and global SIs," Liu
says. "So we're starting to see licensing revenue, which provides
an annuity stream for us, and it's at 100 percent gross margin."

The idea of licensing such a potentially powerful competitive weapon
to other SIs may seem like folly to some, but it makes perfect sense to
Liu. "The largest SI has only 3 percent of the market. It actually
is beneficial to work cooperatively with other SIs in our space rather
than competitively," he says.
While SWIMAGE addresses desktop deployment, another key focus
area for Intrinsic is collaboration applications, under which the company
includes Active Directory deployments, Microsoft Identity Integration Server 2003 and
Exchange. In the case of AD and Exchange, the company uses tools from Quest Software to aid its
deployments and once again developed its own software on top to increase
the level of automation, Liu says.

"When we go into a bid for Active Directory or Exchange, we are
typically 50 percent to 70 percent cheaper than another systems integrator
that's doing it without Quest tools," Liu says. And against a competitor
that is using Quest tools? "We still see ourselves being 10 percent
to 20 percent cheaper," the difference being the edge Intrinsic's
own tools provide in terms of automation.

A Changing World
Automating is crucial given the changing nature of the services business.
Traditionally, SIs simply billed based on time and materials, which provided
a disincentive to automate -- doing jobs faster meant less revenue. But
less expensive labor from India and elsewhere and the specter of competition
from outsourcing is forcing SIs to compete on a fixed-cost basis, Liu
says. "If the world is moving toward fixed cost, increasingly systems
integrators are being forced to increase gross margins," he says.
Given that labor is a service provider's biggest cost, the key to increasing
margins is to reduce labor costs. "The way to do that, in our opinion,
is through software and automation."

It also helps to keep the pipeline full of projects. With that in mind,
in the latter half of 2004, Intrinsic began investing heavily in the DSP
program that Microsoft launched to accelerate deployments of Windows XP.
Microsoft invited providers to learn about its approach to XP deployments
and become certified in the process, as well as to get involved in Accelerated
Deployment Sessions (ADS) with customers. Each ADS involves about three
days' worth of assessments of a customer's infrastructure. The goal is
to help customers understand why they should deploy XP (and soon, Vista)
and how much it will cost, Liu says.

Microsoft reimburses its partners about $3,000 for each ADS -- hardly
enough to compensate the company for the time that goes into it. The payoff,
however, can be great if you wind up landing the migration project. "We
spent a lot of cycles working with the group in Redmond and the DSP people
in the field," Liu says. "We worked with them to help them understand
why we were the best partner, why we could do things quicker, faster,
better."

Eighteen months into the effort, Liu says Intrinsic was recognized for
having the second-most ADSes of any systems integrator in the country,
behind Unisys. And what about the payoff in terms of migration work? "It's
taken a while, but we're finally starting to see a payoff. We're starting
to get the projects," he says. And the XP discussion is just a beachhead.
"It gets us in the door to the customer, and we find out they need
an entire infrastructure upgrade, including a directory structure and
SMS as well."

The moral of the story, according to Liu, is: "You've got to commit.
You can't have one leg in and the other leg out."

Commitment. That, too, is an attribute Liu shares with Larry Bird, who,
by the way, did indeed win that first long-distance shooting contest.
Not to mention the next two.